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FHA loan - overtime

Established Contributor

FHA loan - overtime

When factoring in overtime for an FHA loan, I understand you need proof of two years worth, which I have. Is that enough to satisfy the “reasonable to continue” aspect, or is there something else FHA requires?
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Message 1 of 10
9 REPLIES
Established Contributor

Re: FHA loan - overtime

You should be fine.

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 2 of 10
Established Contributor

Re: FHA loan - overtime

Thanks...I guess my concern is the portion of 'likely to continue' ...not really sure how that works, if it depends on the lender, etc...

Chase Freedom: $1500, Citi Diamond Preferred: $3000, Barclays: $3900, Chase Disney Visa: $1500, Chase Southwest Signature: $5000, Citi TY Preferred: $3000, Cap One Platinum: $1750, Cap One Platinum Rewards: $2500, Orchard Bank: $900, Kay Store Card: $6600, PayPal $2200
Message 3 of 10
Frequent Contributor

Re: FHA loan - overtime

Yes unless your O/T has declined recently. I had a file where my borrower had consistant O/T for several years, then in the past 12 months his O/T dropped. I ask why and he said, "I just got burned out". I told him that the Underwriter was most likely going to default to lowest 12 months. As long as your O/T is fairly consistant, then you are good at adding the most recent 24 months then divide it by 24 to get your average.

 

Best wishes to you!

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
Message 4 of 10
Established Contributor

Re: FHA loan - overtime


@EaglesFan2006 wrote:
When factoring in overtime for an FHA loan, I understand you need proof of two years worth, which I have. Is that enough to satisfy the “reasonable to continue” aspect, or is there something else FHA requires?

Hi EaglesFan2006,

The "reasonable or likely to continue" aspect has to do with the employer stating that the OT is likely to continue on the written verification of employment that your lender will send to your employer.

Does that make sense?

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 10
Established Contributor

Re: FHA loan - overtime

It makes sense...is that standard on all VOEs?  I read through the language in the FHA HUD and its confusing.  I guess that while I'm confident overtime will continue, I'm nervous about someone in HR not checking that box.


@VALoanMaster wrote:

@EaglesFan2006 wrote:
When factoring in overtime for an FHA loan, I understand you need proof of two years worth, which I have. Is that enough to satisfy the “reasonable to continue” aspect, or is there something else FHA requires?

Hi EaglesFan2006,

The "reasonable or likely to continue" aspect has to do with the employer stating that the OT is likely to continue on the written verification of employment that your lender will send to your employer.

Does that make sense?

 


 

Chase Freedom: $1500, Citi Diamond Preferred: $3000, Barclays: $3900, Chase Disney Visa: $1500, Chase Southwest Signature: $5000, Citi TY Preferred: $3000, Cap One Platinum: $1750, Cap One Platinum Rewards: $2500, Orchard Bank: $900, Kay Store Card: $6600, PayPal $2200
Message 6 of 10
Established Contributor

Re: FHA loan - overtime

So is that portion of VOE required? My lender seemed to think the history is enough. Want to make sure I’m not getting wrong info!
Chase Freedom: $1500, Citi Diamond Preferred: $3000, Barclays: $3900, Chase Disney Visa: $1500, Chase Southwest Signature: $5000, Citi TY Preferred: $3000, Cap One Platinum: $1750, Cap One Platinum Rewards: $2500, Orchard Bank: $900, Kay Store Card: $6600, PayPal $2200
Message 7 of 10
Established Contributor

Re: FHA loan - overtime

This is where I would recommend asking your LO about their process.

 

Sometimes the DU or LPA findings for a W2 don't require a written VOE and just a verbal. 

 

In these instances your Lender may be using a conservative amount of OT.  If you feel you are "tight" on the DTI side and want maximum earnings allocated to your loan file this could be a problem if you are in one of those 'zones' that impact approval or pricing.

 

 

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 8 of 10
Established Contributor

Re: FHA loan - overtime


@NC_Mtg_Loaner wrote:

This is where I would recommend asking your LO about their process.

 

Sometimes the DU or LPA findings for a W2 don't require a written VOE and just a verbal. 

 

In these instances your Lender may be using a conservative amount of OT.  If you feel you are "tight" on the DTI side and want maximum earnings allocated to your loan file this could be a problem if you are in one of those 'zones' that impact approval or pricing.

 

 


Thanks,

 

I'm not sure I really understand the last part about 'zones.'   Basically the LO I talked to put my information, including bonus and OT, into automated underwriting and said I was all good.  He told me there is nothing to worry about on this end.  That being said, I can't help but wonder what would happen should my employer not check that box (even though OT will continue) because I've read a lot of stories about how employers use 3rd parties to verify info and essentially don't want to be bothered with the other questions.   With FHA I'm not sure if verbal VOE is sufficient or not.

Chase Freedom: $1500, Citi Diamond Preferred: $3000, Barclays: $3900, Chase Disney Visa: $1500, Chase Southwest Signature: $5000, Citi TY Preferred: $3000, Cap One Platinum: $1750, Cap One Platinum Rewards: $2500, Orchard Bank: $900, Kay Store Card: $6600, PayPal $2200
Message 9 of 10
Community Leader
Super Contributor

Re: FHA loan - overtime

Eliminate the need to speculate what will happen by calling up your HR department and ask what they would mark on the VOE form where it asks if OT is likely to continue.

Helping people with Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
In Irvine, CA and lending in all 50 states

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